Teza's Malyshev Faces Perjury Charges

Mar 11 2011 | 1:22pm ET

The former head of Citadel Investment Group's high-frequency trading team has been indicted for perjury.

Mikhail Malyshev was freed on $100,000 bond. According to prosecutors, Malyshev lied in an affidavit and in court about destroying evidence as part of Citadel's lawsuit against him and two other employees.

Malyshev, who left Citadel to found high-frequency trading firm Teza Technologies, in contravention of his non-compete agreement, according to Citadel, admitted on the stand that he had deleted files and used scrubbing software on his computers after being sued by Citadel. Malyshev called the move "a stupid one" but denied he intended to destroy evidence—Malyshev claimed he was deleting pornography to avoid embarrassment.

But he also said on the stand and in an affidavit that he had not deleted any active files, and had only used the scrubbing software for "a few minutes." But, according to the Cook County Sheriff's office, forensic investigations of those computers showed that he used the scrubbing software for more than two hours, and, when confronted with that evidence, that Malyshev admitted he had done so.

Malyshev faces two counts of perjury. He will be back in court on April 7.

The Citadel litigation is not the only time Malyshev and Teza have found themselves in court. The firm had hired a former Goldman Sachs programmer, Sergey Aleynikov, only to fire him after he was accused of stealing his old employer's proprietary high-frequency trading software. Aleynikov was convicted in December.

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